Scott Morrison vows to keep his cool on economy

Scott Morrison is staring down ­increasing pressure from business leaders to take action.

Scott Morrison during question time on Wednesday. Picture: AAP

Scott Morrison is staring down ­increasing pressure from business leaders to take action to boost economic growth, in the face of a “synchronised’’ global slowdown that is sapping confidence despite repeated cuts in official interest rates.

The Prime Minister vowed to keep a “cool’’ head as Tuesday’s downgrade in Australian growth forecasts by the International Monetary Fund dominated debate in federal parliament and triggered calls from Anthony ­Albanese for a global financial ­crisis-style stimulus package.

As Mr Morrison rebuffed the Labor call and charges that the government was going “soft’’, the nation’s longest-serving treasurer and now Nine chairman, Peter Costello, called for reforms to tackle regulatory inefficiencies.

READ MORE: Labor raises alarm, but no need for economic panic | Albanese comes out of shadows to hook Morrison

Australian Industry Group chief executive Innes Willox called for tax cuts and infra­structure projects to be brought forward.

Ahead of critical annual meetings of the G20, World Bank, IMF and central bank governors in Washington, the Treasurer said Australia would escalate the case for revision of world trade rules which Mr Morrison has argued gives China an unfair advantage.

“As the IMF has indicated, international events are contributing to a ‘synchronised slowdown’ in global growth,” Mr Frydenberg told The Australian. “The meetings provide an ­important opportunity for Australia to continue to push the case for a rules-based trading system and reforms to multilateral ­institutions such as the World Trade Organisation for the settlement of disputes.”

Mr Frydenberg said the Morrison government would “stay the course” and focus on “considered, disciplined and responsible” economic management, while ­remaining open to new policies. The government argues that three RBA cuts in interest rates since the May election and the first phase of its tax cuts are ­providing economic stimulus.

Demanding a “stimulus spark” to energise the economy and rebuild confidence, employers warned the IMF’s reduction in the outlook for global growth and downgrading of its forecasts for Australia highlighted the ­accumulating headwinds faced by businesses and households.

Mr Willox declared there was a clear place for a sensible acceleration of advanced infrastructure investment and public works. He also made a case to closely consider bringing forward personal income tax cuts.

Mr Costello said fiscal and monetary policy had run out of puff and supply-side reforms such as deregulation were now the key to improving efficiency and ­restoring growth, as retailers pushed for a fresh look at lowering the company tax rate.

Despite the IMF again slashing its growth forecast for Australia from 2.1 per cent to 1.7 per cent — well below the government’s 2.25 per cent forecast — Mr Costello said he did not agree with the school of thought that it was “all doom and gloom out there”.

“We need to turn to another arm of policy which has been long forgotten and that’s the supply side,” he told a Citi investor conference in Sydney.

“After 10 years of deficits and 28 years of continuous growth, we could really get a boost by dealing with some of the imbalances that have built up in the economy.”

While the Morrison government has been under pressure to ditch its commitment to a budget surplus and pump-prime the economy by going into deficit, Mr Costello said he did not believe this held much appeal.

Australian Chamber of Commerce and Industry chief executive James Pearson agreed that at this stage the government should be encouraged to maintain its plan to deliver a surplus. He said he wanted measures introduced to stimulate growth in the digital and circular economies, with a key focus on recycling. “Government has a key role to play as a procurer of recyclable material and putting in place the enabling conditions for transitioning to a circular economy,” Mr Pearson said.

“For example, big infrastructure projects that are rolling out across the country provide opportunities to use recycled material, creating much needed demand.”

The Prime Minister said uncertain times called for lower taxes, reducing the cost of doing business, expanding trade borders, ­investing in infrastructure and ­defence, and upskilling the workforce. “Now is the time for our economic and financial management, one that is about cool and clear heads. It is not a time for Labor’s policies of panic and crisis,” Mr Morrison said.

The Opposition Leader ­focused Labor’s attack on the government over the economic outlook and reflected on advice to the previous Labor government from former Treasury secretary Ken Henry during the global financial crisis to “go hard, go early, go households”, which led to Kevin Rudd’s cash stimulus.

“This government is going slowly, going soft and going nowhere when it comes to an economic plan,” Mr Albanese said. “They need to develop an economic plan that grows the economy. They’ve been complacent.

“We argued, during the tax debate that they should bring forward stage two of the tax cuts. They talk about infrastructure and yet they have projects like Linkfield Road in Brisbane that is due to commence in 2026-27. It’s ready to go now.”

Australian Retailers Association executive director Russell Zimmerman said record-low interest rates, the July 1 increase in the minimum wage and up to $1080 in tax cuts for low- and ­middle-income earners had created the “right” economic conditions but further tax cuts would stimulate business investment.

A reduction in the company tax rate and acceleration of the government’s personal income tax cuts plan should be considered.

“I say this very cautiously. There is a certain concern by consumers out there that because the Reserve Bank has reduced interest rates to such a low point, the consumer is now questioning whether or not there are now problems within Australia,” Mr Zimmerman said.

Additional reporting: Richard Gluyas